Analysis of EUR/USD, GBP/USD January 29, 2014
The price action on the EUR/USD shows a rather clean three push move to the downside from the highs, however these are intraday pushes that are short on what we expect for a push considering the average daily range. When they move price like this it shows that they are not so sure they can run a plan and shows less conviction on direction. In short they most often are waiting for something. In this case the culprit is the FED Meeting today. Therefore today the best way to treat this pair is to trade the extreme of yesterdays range looking for a short with manipulation at 1.3684 or look for the long at 1.3634 where the four hour and one hour 200 EMAs sit. This will be a level that will be hard to break to the downside.
Having said that from what I have seen as of late the FED is more likely to hold the bond purchases where they are at and some think they may taper a little bit more. In both cases the EU should have a move to the downside. The wild card is if the say anything in the statement about adding back into the QEternity if the economy gets worse. We all know its not getting better and figures are fudged so if they say they will add in that case the EU will bounce. This should be an interesting trading day but will likely be slow until Bernanke has his last day.
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The GBP/USD showed the correlation holding with very similar price action yesterday also showing a potential fake out after the first intraday push to the upside. If there wasn’t big news that has potential to run the direction I would still be bias for the next push to the upside but that is not the case today. Again the best way to treat the GU is the same as the Euro trading from the extremes at 1.6616-20 for the short or 1.6544 for the long. There is one scenario I will be willing to take the short from 1.6600 seeing the Asian range widen and leave the Asian box closer to its lows. Of course I will want a good entry since the could run stops to the psych 20 level and if I do get an entry there I will want to get by stop to break even before getting off to bed while leaving my take profit around 200 pips away just in case they do taper more and I will manage the trade tomorrow.
Forex News Today
There are only a couple other news events to watch today besides the FED. Early on there is the Gfk Consumer Climate for Germany and a speech from the BOE Governor Carney. As usual on FED day the German news will need a large miss to create a decent move while Carney could say anything to move the markets but I don’t think he will want to upstage Helicopter Ben on his last meeting at the FED.
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